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Political shift lifts USD/JPY as Japan's ruling party loses ground
Mixed start with strong USD driven by rising yields and Fed rate cut expectations
USD/JPY: Rises to 153 amid Japan’s ruling party losing its lower-house majority
EUR/USD: Steady near 1.0790, facing potential resistance from a strong USD
WTI down as Middle East tensions ease; OPEC+ to increase December output by 180,000 barrels/day
Global markets start the week with a mix of reactions to ongoing economic policy announcements and recent geopolitical developments. The US Dollar (USD) maintains its strength, fueled by rising Treasury yields and expectations of a tempered approach from the Federal Reserve on rate cuts. In Asia, China’s commitment to stabilizing its economy and Japan’s shifting political landscape are key factors influencing commodities and forex trends, presenting an active week for market participants.
Gold
Gold prices opened with a slight dip, pulling back from Friday’s approach to $2,750. The strengthening USD, supported by climbing US Treasury yields and the likelihood of smaller Fed rate cuts, exerts pressure on the metal. A generally optimistic market sentiment adds to the challenges facing gold prices.
Nonetheless, geopolitical risks tied to Middle East tensions and the upcoming US elections continue to support gold’s safe-haven appeal, providing a buffer against further downside. Investors remain cautious ahead of key US data releases this week—such as Q3 GDP, the PCE Price Index, and Nonfarm Payrolls (NFP)- which could offer fresh direction for XAU/USD positioning.
Crude Oil
West Texas Intermediate crude oil faces downward pressure as signs of easing tensions in the Middle East impact market sentiment. Additionally, OPEC+ has outlined plans to increase output by 180,000 barrels per day starting in December, which could influence supply dynamics in the short term and weigh on oil prices.
Currenies
- USD/JPY: The USD/JPY pair has gained momentum, trading around 153 amid fresh political uncertainties in Japan. Following Japan’s national election, the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito lost their majority in the lower house for the first time in 15 years, securing only 215 seats out of 465.
- EUR/USD: The EUR/USD pair remains stable near 1.0790 in Monday’s Asian session, following last week’s declines.
- China’s Countercyclical Measures: China’s Vice Minister of Finance, Liao Min, announced that the country will increase countercyclical adjustments to support economic growth in Q4. This move aims to secure the annual growth target of around 5% and suggests additional policy efforts to stabilize China’s economy, which could influence broader risk sentiment in the region.
